Reuters – Motorola Inc. will not be able to supply popular digital camera cell phones in time to meet expected high demand in this year’s U.S. holiday season, two large customers said on Friday.
Reports of the delays, which initially sent Motorola shares down more than 5 percent on Friday, come on the heels of the surprise resignation last week of Motorola’s chairman and chief executive, Christopher Galvin, amid differences with the board.
Verizon Wireless, a joint venture of Verizon Communications and Vodafone, said Friday it had been expecting the V810, with built-in digital camera, from Motorola for the crucial fourth quarter. However, it will not be ready until the first quarter now.
“They just don’t have a camera phone to sell during the fourth quarter,” Verizon Wireless spokesman Jim Gerace said.
The industry rings up about 30 percent of its sales during the fourth quarter, according to the Shosteck Group, a Washington-based wireless consulting firm.
Cingular Wireless also reported delays with its Motorola-made camera phones.
Motorola acknowledged the delays, but said the reports were old and would neither hurt its holiday offerings nor have a material impact on its financial forecasts.
“We have absolutely no intention of being MIA (missing in action) in the holiday season,” Geoffrey Frost, Motorola’s chief brand officer, told Reuters in a telephone interview.
“We hate the fact that a couple of (new cell phones) are a little later than we’d like them to be, but we feel very good about … being in front of consumers with competitive, compelling stuff in the holiday season,” he added.
Frost said the Schaumburg, Illinois-based company will ship millions of camera phones globally in the fourth quarter, including to an unidentified North American carrier.
Still, the delays could cost Motorola, which lost its leading spot in cell phones to Finland’s Nokia in the mid-1990s, even more sales and market share, analysts said. In addition to Nokia, others that could benefit include South Korea’s Samsung Electronics Co. Ltd. and LG Electronics Ltd.
‘LIKE THE BOY WHO CRIED WOLF’
Analysts have criticized Motorola for past delays in rolling out new phones, something it had promised would not reoccur.
“They make a lot of statements that sound very nice, but it all comes down to ‘show me the money,’ and time and again Motorola has let the industry, its partners and its customers down with late products,” said Shosteck Group CEO Jane Zweig. “It’s like the boy who cried wolf. People aren’t going to believe Motorola.”
About 25 million camera phones were sold worldwide in the first half of 2003, and 65 million are expected for the year, or 13 percent of all cell phones sold, according to research firm Strategy Analytics.
Verizon Wireless, the largest U.S. wireless operator, had known for several months of the delay and will meet demand for such phones with LG models, Gerace said. Another Motorola color-screen model, the E310, also would be delayed.
Cingular, a joint venture of SBC Communications Inc. SBC.N and BellSouth Corp. BLS.N , said its original plan was to have two different Motorola camera phones in time for the holiday season.
“The delay in Motorola’s integrated camera phone will limit the choices we offer our customers,” Frank Boyer, vice president at the No. 2 U.S. wireless operator, said in a statement.
The Wall Street Journal reported the delays Friday, and said similar delays are likely with AT&T Wireless Services Inc. An AT&T Wireless spokesman declined to comment.
Shawn Campbell, principal with Chicago-based Campbell Asset Management, said the delays might be a factor in Galvin’s departure. Motorola said it has hired recruitment firm Spencer Stuart to lead the search for a successor.
“Here we go again. This is the exact problem they had before,” said Campbell, whose firm holds Motorola preferred shares.
Motorola shares fell as low as $11.80 before rebounding to close unchanged at $12.53 in the heaviest trading on the New York Stock Exchange on Friday.